David Canellis

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Thirty-two years ago this week, in May 1993, WIRED released its second-ever print edition featuring three legendary cypherpunks on the cover: Tim May, Eric Hughes and John Gilmore.



Steven Levy’s piece, “<a href="https://www.wired.com/1993/02/crypto-rebels/">Crypto Rebels</a>,” handily documents the genesis of the Cypherpunk movement, starting almost two decades earlier in 1975, when Whitfield Diffie led the creation of public-key cryptography alongside Martin Hellman and Ralph Merkle.



Until then, the US government codebreakers had dominated cryptography through the National Security Agency (NSA). Cryptographic tools were considered weapons under the Arms Regulation law, “right alongside tanks and bomber planes,” Levy wrote.



The act of giving regular citizens access to “military-grade” privacy tech like public-key cryptography — which would allow information to be stored trustlessly and sent securely over unsecure networks — was then a brave act of defiance for personal liberty. A fight against government tyranny.



Public-key cryptography would go on to be a cornerstone of the modern internet, protecting emails, bank accounts, website interactions, many other online matters, and, of course, everyone’s bitcoin.



Or as late The Codebreakers author David Kahn wrote, public-key cryptography was the “most revolutionary new concept in the field since…the Renaissance.”&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd3eI8nlufJatICA1Q805iDNciY0hVaE0tNaucD2tyAVbeVroSBSvABh0r-nflKE-61NP4_b2mL3uJV6Fjl8zqJQMP3Of8UmCkXJfU77YaLGoOePM5XjvKKaOixrOaTLVowutElVA?key=7vIqJnFhH6Y8sg0_EjaADRk9" alt=""/><figcaption class="wp-element-caption">Satoshi, is that you?</figcaption></figure>



Around the same time, MIT scientists Rivest, Shamir and Adleman developed a separate public-key method, RSA, which had far greater potential than the government-created Data Encryption Standard, which didn’t use public keys at all.



WIRED’s article also detailed the plight of cryptographer Phil Zimmermann in the wake of his invention of Pretty Good Privacy (PGP) — a mighty, free alternative to RSA that utilized RSA patented technology without permission.



Zimmermann went to great lengths to build PGP, missing five mortgage payments and “coming within an inch” of losing his home. But he wasn’t selling the software — he simply released it into the wild (internet bulletin boards), “like thousands of dandelion seeds blowing in the wind,” he wrote.



Still, the US government made Zimmermann the target of a criminal investigation for munitions export without a license, which was still ongoing at the time of WIRED’s piece.&nbsp;



Two years later, Zimmermann published the entire PGP source code in a hardback book released by MIT Press — allowing anyone in the world to build their own privacy tech all by themselves.&nbsp;



Exporting books is a First Amendment right that should trump any restrictions on the exportation of cryptographic software. The investigation was eventually closed and the Feds brought no charges.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Cypherpunk history &#8211; Wired Magazine issue #2 May 1993, Crypto Rebels. Gilmore, May, Hughes, Zimmerman, Chaum&#39;s &quot;anonymous digital money&quot;. &quot;Cypherpunks write code. Crypto Anarchy is inevitable. It&#39;s already happening&quot; READ: <a href="https://t.co/J5FnbfvSqw">https://t.co/J5FnbfvSqw</a> Photos: an internet premier. <a href="https://t.co/GcXbvn6fNe">pic.twitter.com/GcXbvn6fNe</a>&mdash; FRANCIS &#8211; BULLBITCOIN.COM (@francispouliot_) <a href="https://twitter.com/francispouliot_/status/1046141148786577408?ref_src=twsrc%5Etfw">September 29, 2018</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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To say that there might be no Bitcoin without the Cypherpunks is a severe understatement. Satoshi Nakamoto himself may very well be underneath one of the many masks featured in WIRED’s article.



Here’s how deep the parallels go: at multiple points in Levy’s writing, one could easily sub Bitcoin-related terms into any number of sentences describing the fight for accessible cryptography:



“Diffie recognized that the solution rested in a decentralized system in which each person held the literal key to his or her own <s>privacy</s> financial sovereignty.”



“In the Cypherpunk mind, <s>cryptography</s> money is too important to leave to governments or even well-meaning companies.”



&#8220;You can have my <s>encryption algorithm</s>… bitcoins, when you pry my cold dead fingers from my private key.&#8221;



I’ll leave you to read the <a href="https://www.wired.com/1993/02/crypto-rebels/">full piece</a>, which is still available online, if nothing more than to reinforce the significance of the “crypto” in “cryptocurrency.” 



After all, very real individuals fought years for its existence.



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Cybersecurity

Crypto in 1993: WIRED cover story on Cypherpunks turns 32

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To be clear, Satoshi never actually coded a poker game into the Bitcoin client.&nbsp;



Bitcoin’s creator did, however, include the graphic user interface for a poker lobby in the first <a href="https://github.com/bitcoin/bitcoin/commit/4405b78d6059e536c36974088a8ed4d9f0f29898">version</a>. Satoshi removed the code in the very next commit.



Erik Voorhees made up for it and then some with SatoshiDice.



The service <a href="https://bitcointalk.org/index.php?topic=77870.0">launched</a> around this time in 2012 as a provably fair Bitcoin betting game that mostly ran onchain.



Players would directly send bitcoin to one of many “1dice” vanity addresses, each with their own special properties designated by the platform.



Deposit between 0.001 BTC and ~20 BTC to 1dice7fUk, for example, and you’d have 24.4% odds of instantly quadrupling your coins.



Otherwise, sending up to 0.0025 BTC to 1dice1e6p… would net a 0.0015% chance of boosting your original bet by 65,000x.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfT1cr2wqn1yUtkOc9HthO-1tttkML228QkP-GTRz4FIBKc5Qr-jV2tVSMMb3mTW7ESembExsMEsA72wk7JfAy0YFnaUnH62Yub6UBSVZAioNZwQpg3zwBZi_pCQbF8deyOzeBBVQ?key=W4Xnu8cU1IbUl2CiljmF_UEd" alt=""/><figcaption class="wp-element-caption">The original SatoshiDice is defunct, so do your own research before interacting with any modern sites with similar names.</figcaption></figure>



SatoshiDice bets won or lost depending on their transaction hash. The site would run the bet’s hash through a secondary function and use the first four bytes of that hash as the so-called lucky number.&nbsp;



If that number fell below a preset threshold for the associated odds, the bet was considered a winner and was paid out immediately. Losers would instead receive a single satoshi in return.&nbsp;



SatoshiDice later published the secrets used to hash the transaction IDs, so that players could reverse-engineer the process to confirm the game wasn’t rigged. This method was the precursor to the Provably Fair system utilized by many modern crypto gambling sites.



“SatoshiDice is a subroutine of an advanced artificial intelligence, which arose spontaneously as one of the less-harmful consequences of the United States&#8217; quantitative easing monetary program,” joked the site’s <a href="https://web.archive.org/web/20120508030355/http://www.satoshidice.com/bits.php">documentation</a>.&nbsp;



“The system exists solely within the RAM of an abandoned Nokia 3310 mobile phone which was left in a subway station in Tokyo, and powers itself by feeding off the ghost of the late Satoshi Nakamoto (who was in fact a super hot 20 yr old female Japanese programmer and exotic animal collector).”



“While the Intelligence decides on its next course of action, it runs this SatoshiDice subroutine. Some people ask why Bitcoin was really created&#8230;it was created by the Intelligence as an internet currency which enables free individuals around the world to play the SatoshiDice game. By playing, you are fulfilling the Intelligence&#8217;s Grand Vision.”



Uptake was fast. The bets were super cheap, after all — costing fractions of a penny in fees — and they were accepted and paid out with zero confirmations, usually within 30 seconds.



In a 2014 <a href="https://www.federalreserve.gov/econresdata/feds/2014/files/2014104pap.pdf#:~:text=,weeks%20of%20its%20inception%2C">report</a> on the Bitcoin ecosystem, Federal Reserve analysts found that within weeks, SatoshiDice was responsible for more than half of all bitcoin transactions by volume.&nbsp;



“It is reasonable to conclude that almost all small-value transactions [under $100] on the Bitcoin network before mid-2013 were driven by the online gambling site,” they wrote.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdvHa_qoA9fAWLIByGzDHzl40fM7182i00-A214YthCOscUDbK0kLFimZwygCsK7Bpxb402dBjX2pDSEWEKa0WhN4n4USa_z-c77pVbx305I4lRPwUEz_wNPlj17wu2iGYAS9tW?key=W4Xnu8cU1IbUl2CiljmF_UEd" alt=""/><figcaption class="wp-element-caption">In the left graph, SatoshiDice volume is shown by the red area with all other Bitcoin activity shown in green.</figcaption></figure>



Meanwhile, SatoshiDice had proved extremely profitable. In its first 15 months of operation, over 5.3 million bets had been made through SatoshiDice.



Around 3.9 million were winning bets, in part due to the popularity of addresses carrying the highest odds, with 21% of all bets placed in the 97% category.&nbsp;



SatoshiDice’s <a href="https://www.investopedia.com/articles/personal-finance/110415/why-does-house-always-win-look-casino-profitability.asp#:~:text=The%20house%20edge%2C%20which%20is,to%20a%20bit%20over%202%25.">house edge</a> was <a href="https://wizardofvegas.com/forum/gambling/betting-systems/34702-satoshi-dice-safest-aggressive-martingale-at-50-odds/">calculated</a> at between 1% and 1.9%. One <a href="https://thenextweb.com/news/first-major-bitcoin-acquisition-sees-gambling-site-satoshidice-sold-for-11-5-million">report</a> cited the site’s income at past $50,000 per week, preceding Voorhees to list dividend-paying shares in SatoshiDice on the long-gone Bitcoin securities exchange MPEX in August 2012.



Overall, 13 million shares in the platform were sold to the public, raising 50,600 BTC ($5 million at the time).



With the number of SatoshiDice bets regularly eclipsing BTC transfers, concerns grew over whether it was, in fact, spamming the chain with non-economic activity. 



Around the same time, some miners briefly <a href="https://research.mempool.space/block-size-report/#:~:text=,with%20the%20satoshi%20dice%20website">enforced</a> smaller block size limits, which has been suggested may have been to avoid managing relatively large volumes of SatoshiDice data.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Just discovered that my Bitcoin casino game, SatoshiDice, is now responsible for over 50% of all Bitcoin transactions ever (over 1.37m txs)&mdash; Erik Voorhees (@ErikVoorhees) <a href="https://twitter.com/ErikVoorhees/status/226436118088933376?ref_src=twsrc%5Etfw">July 20, 2012</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Still, in one <a href="https://www.reddit.com/r/Bitcoin/comments/195hvp/satoshidice_player_bets_002_btc_wins_1278_btc/?rdt=62849#:~:text=SatoshiDice%20Player%20Bets%200,2%20or%203%20bitcoins">case</a> shared on Reddit, a SatoshiDice player had bet 0.02 BTC (~$0.40 at the time) to win 1,278 BTC — a 64,000x payout then worth $28,000 and nearly $127 million in today’s money.&nbsp;



Voorhees was also a big winner, despite a minor <a href="https://www.sec.gov/newsroom/press-releases/2014-111">run-in</a> with the SEC over the MPEX offering. He made <a href="https://thenextweb.com/news/first-major-bitcoin-acquisition-sees-gambling-site-satoshidice-sold-for-11-5-million">history</a> when he sold his SatoshiDice stake in July 2013 to an unnamed buyer for $11.5 million.



The deal was paid entirely in bitcoins, precisely 126,315 BTC, the equivalent of almost $12 billion at current prices.&nbsp;



If held until today, that’s equal to Voorhees winning a 10,000x bet on SatoshiDice, which carried winning odds of just 0.0061%.&nbsp;



Although, it’s more likely that some of those coins went into funding ShapeShift, which Voorhees founded about a year after cashing out. Clearly, the house always wins.



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Bitcoin gambling: How SatoshiDice picked up where Satoshi left off

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“Being too far ahead of your time is indistinguishable from being wrong.”



That was Howard Marks, co-founder of Oaktree Capital Management, in his 2011 <a href="https://www.oaktreecapital.com/insights/memo/on-bubble-watch">book</a> The Most Important Thing.&nbsp;



Marks had obviously never heard of bitcoin.



Luckily, two MIT students never took that adage to heart. On this day in 2014, Jeremy Rubin and Dan Elitzer <a href="https://web.archive.org/web/20140429234052/http://bitcoin.mit.edu/announcing-the-mit-bitcoin-project/">announced</a> a bombastic plan to give every undergraduate student at their university $100 in bitcoin.



The price of bitcoin has since multiplied by more than 220x. Take that, Marks!



<h2 class="wp-block-heading">On This Day — the MIT Bitcoin Project</h2>



Granted, mainstream Bitcoin discourse was indeed accelerating by this point in 2014.



Former Federal Reserve Chair Alan Greenspan had recently <a href="https://www.bloomberg.com/news/articles/2013-12-04/greenspan-says-bitcoin-a-bubble-without-intrinsic-currency-value">labeled</a> bitcoin a bubble without intrinsic value. In the 18 months prior, bitcoin’s price had exploded from $10 to almost $1,000, one of its first great bull runs.&nbsp;



The Bitcoin economy was also actively evolving in response to government crackdowns. Mt. Gox had just <a href="https://www.reuters.com/article/business/mt-gox-files-for-bankruptcy-hit-with-lawsuit-idUSBREA1R0FX/">filed</a> for bankruptcy, while Ross Ulbricht’s Silk Road and Charlie Shrem’s BitInstant had peaked preceding the arrest of both founders.



Around the same time, Farmville developer Zynga had started testing bitcoin payments for in-game purchases, mirroring a recent move made by Overstock to accept bitcoin for ecommerce.



Those events put Bitcoin on the macro scale. Rubin and Elitzer went micro, opting to instead seed a bitcoin-based peer-to-peer economy in their campus.&nbsp;



Rubin was a sophomore at the time, studying computer science, and Elitzer a first-year MBA student at MIT Sloan and president of the MIT Bitcoin Club. Rubin went on to contribute to Bitcoin Core and has founded a series of ventures in the space. Elitzer later co-founded venture firms IDEO CoLab Ventures and Nascent.



The MIT Bitcoin Project also had backing from MIT Sloan professors Christian Catalini and Catherine Tucker, as well as from MIT itself, with the BTC drop positioned as an IRB-approved study on the role of early adopters in the tech adoption curve.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Excited to announce the <a href="https://twitter.com/hashtag/MITBitcoinProject?src=hash&amp;ref_src=twsrc%5Etfw">#MITBitcoinProject</a>. $100 in BTC to all MIT undergrads fall 2014. What will you build? Come to the expo, learn more!&mdash; my (@JeremyRubin) <a href="https://twitter.com/JeremyRubin/status/461123888022564864?ref_src=twsrc%5Etfw">April 29, 2014</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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“One problem was that there wasn&#8217;t any traditional community in the world where bitcoin was used and understood. Initiating network effects is really hard,” Elitzer wrote in a <a href="https://www.coindesk.com/markets/2017/04/21/that-time-we-gave-500000-in-bitcoin-to-college-kids">retrospective</a> years later.&nbsp;



“Our goal was to create the first such community at the world&#8217;s premier technical university. If there was anywhere bitcoin could take off, it was at MIT.”



The pair had raised $500,000 that would be converted into bitcoin and sent out to students, with half coming from Hudson River Trading co-founder Alexander Morcos and the remaining from around two <a href="https://thetech.com/2014/04/29/bitcoin-v134-n22#:~:text=Rubin%20and%20Elitzer%20said%20they%E2%80%99ve,firm%20based%20in%20New%20York">dozen</a> alumni and other donors from the bitcoin community.&nbsp;



It was enough to cover all 4,494 undergraduate MIT students enrolled in October 2014. Students had to sign up for a waitlist, complete a survey and register a Bitcoin wallet in order to receive the funds. Around 70% of the cohort did so, equivalent to 3,108 undergraduates.



“Giving students access to cryptocurrencies is analogous to providing them with internet access at the dawn of the internet era,” Rubin said in the announcement post. “When the distribution happens this fall, it will make the MIT campus the first place in the world where it will be possible to assume widespread access to Bitcoin.”



Sadly, bitcoin usage at MIT never really took off, despite a Bitcoin Expo and a hack-a-thon in support. Years later, Rubin and Elitzer recounted their experiences with spending bitcoin on campus: “I bought a mango smoothie from a &#8216;bitcoin-ready&#8217; burrito joint, but the cashier was confused on how to do it correctly,” Rubin said.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Launching MIT BitComp today, a summer <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> competition w $15,000+ in prizes <a href="http://t.co/HyJdkiUIDG">http://t.co/HyJdkiUIDG</a> Teams need an <a href="https://twitter.com/MIT?ref_src=twsrc%5Etfw">@MIT</a> student/alum!&mdash; my (@JeremyRubin) <a href="https://twitter.com/JeremyRubin/status/474203416252530688?ref_src=twsrc%5Etfw">June 4, 2014</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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Elitzer: “I purchased a hat at the Coop, MIT and Harvard’s student store. Not only did it take them five minutes to track down the only iPad in the store set up to take bitcoin, but I had to leave the store to send the transaction because my phone wasn&#8217;t getting any signal at the register.”



As for the MIT <a href="https://news.mit.edu/2017/bitcoin-study-period-exclusivity-encourages-early-adopters-0713">study</a>, it was eventually published in Science in July 2017 with a key finding: delaying early adopters’ access to a new technology could slow down adoption.&nbsp;



The researchers had found that by holding back $100 bitcoin payments for a subset of students classed as &#8220;natural early adopters,” that group was 4.3 times more likely to dump their coins immediately, as long as they lived on campus.



Perhaps the natural early adopters (NEAs) found value in being perceived as having exclusive access to a new technology like Bitcoin, and thought it better socially to opt out if they weren’t first.



“Our results highlight a novel, understudied mechanism through which NEAs might obstruct further diffusion if they refuse to adopt because their desire to feel unique is challenged or the consumption value they derive from early, exclusive access is reduced,” the researchers wrote.



Joke’s on them. It’s unclear how many have sold in the meantime, but in 2017 more than half of the students were reportedly still holding their coins.



Bitcoin has risen by another 4,000% since then, and the $100 worth of bitcoin originally paid to MIT students in 2014 would be worth as much as $26,000 right now, turning the $500,000 originally pledged into $110 million today.



I’d still bet all of them wish they were even earlier.



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Bitcoin

MIT’s free bitcoin experiment now valued at $110 million

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There is so much more to Bitcoin than Satoshi. Let’s celebrate!



Today is Satoshi Disappear Day, as <a href="https://bitcointalk.org/index.php?topic=6730.20">declared</a> by early contributor Kiba on this day in 2011.&nbsp;



“Since satoshi has been confirmed to be not coming back, the bitcoin community now [has] to fend for ourselves,” Kiba wrote.



“I propose we make a bitcoin holiday in honor of our legendary anonymous founder and to observe the fact that the bitcoin community will be just fine after the inventor of bitcoin left. Even if Gavin is hit by the bus tomorrow, we can live.”



Gavin Andresen had <a href="http://gavinandresen.ninja/eleven-years-ago-today">disclosed</a> his impending meeting with the CIA, both privately with Satoshi and publicly on the Bitcointalk forum, only days earlier.



<h2 class="wp-block-heading">On This Day — Satoshi Disappear Day</h2>



What Kiba said turned out to be true. Since Satoshi left, other contributors have worked together to release 73 new versions of the software on bitcoin’s way to becoming a multi-trillion dollar asset.



In that time, developers have pushed upgrades big and small while mitigating bugs and potential <a href="https://www.coindesk.com/markets/2018/09/21/the-latest-bitcoin-bug-was-so-bad-developers-kept-its-full-details-a-secret">disasters</a>. Bitcoin’s creator was otherwise only around for a half dozen or so, even if they conceived and built the original version all by themselves.



We also can’t exactly draw a direct line between Gavin’s CIA visit and Satoshi’s disappearance. A few days before Gavin announced he was to meet with the CIA, Satoshi in an email had already mentioned to another early developer, Mike Hearn, that he had “<a href="https://blockworks.co/news/satoshi-correspondence-bitcoin-emails-research">moved on to other things</a>.”&nbsp;



But considering Satoshi apparently never replied to Gavin’s email, at the very least we can assume it helped confirm their decision to never return.



Meanwhile, Bitcoin was attracting mainstream media attention, with Andy Greenberg’s <a href="https://www.forbes.com/forbes/2011/0509/technology-psilocybin-bitcoins-gavin-andresen-crypto-currency.html">article</a> in Forbes, “Crypto Currency,” running in the week leading up to the inaugural Satoshi Disappear Day.&nbsp;



The article is a progenitor of the “super shadowy coder” trope that has plagued political crypto discourse ever since. It mistakenly describes Bitcoin developers as Gavin’s “underground cadre of cypherpunks” working on anonymous money used to buy illegal drugs outside of government oversight — an image against which Satoshi wanted to push back.



“I wish you wouldn’t keep talking about me as a mysterious shadowy figure, the press just turns that into a pirate currency angle,” Satoshi told Gavin. “Maybe instead make it about the open source project and give more credit to your dev contributors; it helps motivate them.”



Gavin wasn’t happy with the “wacky pirate money” theme either, and agreed that more credit for other contributors was a great idea.



“On a completely different subject: I did something that I hope turns out to be smart, but might be stupid,” Gavin said. He’d been contacted by In-Q-Tel, a venture capital firm established by the CIA that discovers and invests in cutting-edge technologies that would benefit US agencies.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfuaeYzJ_C1A_8cbtETJxHXeAlKf0Yi5XmqVgU0oAAdYxdMRSec76gBdqG7sd73mnZMRrSTHDcMUIAOz7gPSKoEDEF15cDc24IzvwJw-mkbLm8h-KT1P1lMaTa60tnVA8QlZw37AA?key=osbK7nHTSU9FadKSXHA6lcD4" alt=""/><figcaption class="wp-element-caption">Gavin’s visit with the CIA was a recurring topic of interest in Bitcoin IRC <a href="https://buildingbitcoin.org/bitcoin-dev/log-2011-06-13.html">channels</a>.</figcaption></figure>



In-Q-Tel had invited Gavin to its annual conference on emerging technologies, with the theme of that year being “Mobility of Money.”



“They asked if I’d be willing to talk about Bitcoin, and I committed to giving a 50-minute presentation and participating in a panel discussion,” Gavin wrote in his <a href="http://gavinandresen.ninja/eleven-years-ago-today">email</a>.&nbsp;



“I hope that by talking directly to ‘them’ and, more importantly, listening to their questions/concerns, they will think of Bitcoin the way I do — as a just-plain-better, more efficient, less-subject-to-political-whims money. Not as an all-powerful black-market tool that will be used by anarchists to overthrow The System.”



Gavin found himself between a rock and a hard place. “It might be really stupid if it just raises Bitcoin’s visibility on [the CIA’s] radar, but I think it is way too late for that; Bitcoin is already on their radar,” he told Satoshi.



He was also transparent about the trip. Gavin shared his presentation on BitcoinTalk shortly after (the full version is still available via <a href="https://web.archive.org/web/20160303090048/https://s3.amazonaws.com/gavinandresen-bitcoin/GavinAndresenCIATalk.pdf">archive</a>) and quickly appeared on Bruce Wagner’s The Bitcoin Show to discuss the meeting.



“After thinking pretty hard about it, I decided I would do it because it&#8217;s an open-source project. I figured, you know, going to the CIA and talking very openly about what Bitcoin is and what it can do wouldn&#8217;t hurt the project. It&#8217;s not a secret,” Gavin said on the <a href="https://www.youtube.com/watch?v=1xcMFKfX9ZU">podcast</a>.



The conference itself was a three-day event with the first day unclassified, which meant Gavin could discuss it, while the other two were classified. Gavin said there were people from PayPal and Facebook in attendance, as well as economists from the Federal Reserve.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdsy4Pal5ThIe59pLO34GQzTv1k4JRwr8MrWua3FMHkVvBcpLaLi0tEbfddLDkEEWHQgGE1IEZZfmS4tkvtfTwExZSAlCyFPOvoH6DeZZ3JfKJ_C4-_aq0q0cerdJQnEDU0KMfj?key=osbK7nHTSU9FadKSXHA6lcD4" alt=""/><figcaption class="wp-element-caption">Gavin’s presentation offered a tutorial on how Bitcoin works, alongside a rundown on the state of the ecosystem as it was in June 2011.</figcaption></figure>



As for why the CIA might be interested in Bitcoin, Gavin could only speculate, like the rest of us.



“I mean, obviously, you know, paying people covertly is part of what the CIA does, and so a payment system that they could use to [pay] somebody covertly is very interesting to them,” Gavin said.



For those after more intrigue, this might help: Gavin sold bitcoin to a CIA agent at the conference. “I had a couple of people come up to me afterwards and say they thought bitcoin is really cool. One interesting interaction: I actually sold a bitcoin while I was there to one of the CIA people.”



“I had showed <a href="https://en.bitcoin.it/wiki/Bitbills">Bitbills</a> — I had a couple of Bitbills in my wallet as an example of a physical bitcoin that you can hold. He said it was very cool and wanted to buy one from me so he could show his boss.” Bitcoin traded at around $15 at the time.



So, there you have it. If the CIA “lab leak” <a href="https://x.com/nic__carter/status/1704922555189182784">theory</a> about Satoshi holds any weight (a big “if”), then it took only two and a half years for one of its own to return to headquarters with an actual bitcoin (it’s now worth almost 6,500x more).



Happy Satoshi Disappear Day!



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Satoshi Disappear Day: CIA agent bought bitcoin from former lead developer

Pete Rizzo

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Imagine being in an industry where a yellow piece of paper is one of your most iconic symbols.&nbsp;



Well, that’s Bitcoin, and today’s legend is none other than Christian Langalis, better known as Bitcoin Sign Guy.



Langalis is the young man in a suit who held up a sign that read “Buy ₿itcoin” while Janet Yellen, then-Chair of the Federal Reserve, stood her ground in front of Congress in 2017.



Today’s story is about much more than just his viral moment, however.



Before he became a meme, Christian was just another 25-year-old working at a global macro fund.&nbsp;



But he wasn&#8217;t your typical Wall Street junior analyst. He was the “young Bitcoin kid.” A man that nobody took seriously when he talked about cryptocurrency.&nbsp;



For Langalis, being dismissed had an unexpected effect. Instead of discouraging him, it opened his eyes to something crucial: The markets weren’t what they seemed.&nbsp;



They were, in his view, artificial constructs propped up by central bank policies. So he did what any self-respecting skeptic would do. He started buying bitcoin.



And like many bitcoiners before and after him, Christian didn’t just buy bitcoin; he wanted to understand the system he was rebelling against. What do you do when you realize the world is only serving the interest of the few? You dive into alternative economics.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">3/ Christian became a fierce Libertarian He started reading everything he could about Austrian economics He read the classics by Schumpeter and Rothbard 😍 <a href="https://t.co/jnhrFZZvh7">pic.twitter.com/jnhrFZZvh7</a>&mdash; The Bitcoin Historian (@pete_rizzo_) <a href="https://twitter.com/pete_rizzo_/status/1913986273317957663?ref_src=twsrc%5Etfw">April 20, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Nowadays, Keynesians rule the world, at the behest of the late John Maynard Keynes.



But others are becoming favorites again, with Schumpeter, Rothbard and Mises staging a comeback. These authors had a deep effect on Langalis, and they pushed him into the Cato Institute, a world-renowned libertarian think tank.



Under the guidance of George Selgin, one of the world’s utmost authorities on money, Christian began developing his own economic thesis on Bitcoin. But he wasn’t content just to profit from bitcoin — he wanted to understand its potential to reshape the financial world.



<h2 class="wp-block-heading">Stage set</h2>



Then came July 2017.&nbsp;



Christian was asked to attend the annual Federal Reserve report to Congress. As Janet Yellen droned on about monetary policy, a bored Christian had an idea. He grabbed his notepad and wrote two simple words: &#8220;Buy ₿itcoin.&#8221;



The price was $2,300 at the time, and bitcoin was in the midst of an epic run that would eventually take it to $20,000. Christian figured he&#8217;d flash the sign and maybe grab a screenshot later. For the LOLs. He had no idea he was about to create a moment that would define Bitcoin culture.



With the price now ~$93,200 per coin, everyone who listened is up almost 4,000%.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">5/ There, Christian was asked to attend the Fed report to Congress Bored, Christian decided to write &quot;Buy Bitcoin&quot; on his notepad He figured he&#39;d flash the sign, then collect the screenshot later&#8230; <a href="https://t.co/cynSy9UADg">pic.twitter.com/cynSy9UADg</a>&mdash; The Bitcoin Historian (@pete_rizzo_) <a href="https://twitter.com/pete_rizzo_/status/1913986424585458041?ref_src=twsrc%5Etfw">April 20, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Within seconds, security descended. Christian was escorted out of the hearing. You can actually see him being removed on the livestream. But by then, it was too late.



We can safely call it the Bitcoin photobomb seen around the world.



<h2 class="wp-block-heading">Aftermath</h2>



The Bitcoin community’s response was immediate and overwhelming.&nbsp;



Christian received over 7 BTC ($16,100 then, $650,000 now) in donations from supporters who appreciated his bold statement. Overnight, he had become an icon.&nbsp;



Instead of getting drunk with fame, Christian’s conviction only deepened — luckily! He later revealed he was holding 99% of his net worth in bitcoin, and declared he “won’t be converting it back into US dollars.”



Did someone say skin in the game?



In the years following his famous stunt, Christian has used his newfound celebrity for good.&nbsp;



He’s appeared at numerous events, always in his trademark suit and tie, raising money for organizations like Coin Center, a non-profit that helps defend Bitcoin&#8217;s interests in Washington DC. Years later, he called it a &#8220;new financial substrate&#8221; and predicted that one BTC will eventually be worth over $1 million.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">10/ In the years to follow, Christian used his celebrity to raise money for charities Here he is with his trademark suit and tie, raising money for Coin Center The non-profit helps defend Bitcoin in D.C. ✊ <a href="https://t.co/IMM9OfFF0S">pic.twitter.com/IMM9OfFF0S</a>&mdash; The Bitcoin Historian (@pete_rizzo_) <a href="https://twitter.com/pete_rizzo_/status/1913986518202327149?ref_src=twsrc%5Etfw">April 20, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



But Langalis isn’t like most of you talking heads. He’s also building. Christian has founded a new Lightning startup that&#8217;s currently in stealth mode, working to advance the Bitcoin economy he believes in.



In a fitting twist of fate, Christian recently auctioned off the original “Buy ₿itcoin” sign for over $1 million. The piece of paper that once photobombed the Federal Reserve Chair had become a piece of Bitcoin history.



<h2 class="wp-block-heading">The Legacy</h2>



Christian Langalis&#8217;s story is more than just a tale of a viral moment.&nbsp;



It’s about having the courage to challenge the status quo, even when nobody takes you seriously, in the status quo’s arena. It’s about understanding that sometimes, the simplest actions can have the biggest impact.



All things that made him CoinDesk’s Most Influential person in Bitcoin in 2017.



For those who bought bitcoin when Christian held up his sign, the returns have been spectacular. But perhaps the real value of his gesture wasn’t in the investment advice, but in the message it sent: that Bitcoin represents a peaceful revolution against the traditional financial system.



Have a great weekend, And remember, sometimes the best investment advice comes on a piece of paper held up behind a Fed chair.



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Christian Langalis: From meme to bitcoin millionaire

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Eleven years ago this week, one of the first great Bitcoin documentaries, The Rise and Rise of Bitcoin, premiered at the Tribeca Film Festival.



The film is rare in that it was made by someone with real skin in the game.



It centers around Daniel Mross, a Pittsburgh-native computer programmer who began mining bitcoin in 2011 and went on to found Bitcoin-focused investment fund Maximalist Capital.



Filmed by brother Nicholas between 2013 and 2014, when bitcoin was headed to $100 for the first time, Dan travels the world to meet major figures in the space, as yet only four years into its lifespan.



They meet <a href="https://x.com/pete_rizzo_/status/1875542871270449274">Charlie Shrem</a>, then-CEO of bitcoin exchange service BitInstant as it worked through sudden supply issues resulting from Mt Gox downtime; <a href="https://x.com/pete_rizzo_/status/1808833197397958969">Eric Voorhees</a>, when BitDice was still a big deal; and Mark Karpeles, who gave a secretive tour of Mt Gox’s office in Japan only months before it went down for good.



Brian Armstrong and Fred Ehrsam also make cameos. Coinbase was timely: The global Bitcoin economy was actively reckoning with the growing need for more crypto exchanges in light of the Mt Gox debacle.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/A06qdTpOYcg?si=SF79EOofDflvZ8Z-" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







The Rise and Rise of Bitcoin has a 7.1 rating on IMDb



The Mross brothers even visit Gavin Andresen — still lead maintainer at the time — at his Massachusetts home. “Do your neighbors know that you’re at the center of one of the most disruptive technologies?” Daniel asked.&nbsp;



“I think they know that I do this wacky Bitcoin project… I don’t think they know quite how big it is yet,” Andresen replied.



One electric scene shows Roger Ver — before the Block Size Wars, when he was Bitcoin Jesus — explain the benefits of Bitcoin (and BitPay, in which he was an early investor) to a Korean grocery store owner in the Bay Area.



Bitcoin and BitPay’s low fees compared to credit cards were a major selling point. “I guarantee over the next couple weeks you’ll have lots of computer nerds that love bitcoins, [who] will be coming in here specifically to shop at your supermarket so that they can pay with Bitcoin,” Ver said.



The store owner had the perfect follow-up: “And there’s no central office that they could raid or anything like that?&#8230;So who’s the owner of bitcoins: everybody that owns bitcoins?”



Ver replied: “Yeah! Just like, ‘Who’s the owner of gold: whoever owns some gold.’ Short of shutting down the entire internet and the entire world, there’s no way to stop Bitcoin.”



When we speak of Bitcoin nostalgia, this type of scene comes to mind. What we all would do to return to a time when simply explaining the fundamentals of Bitcoin as it is in the moment, and not what it could be sometime in the future, brought real wonder into people’s lives.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfLiYx1lSprSWMDssGbQHWuNS0nUmpkXqdICR_gRUFJIBCY10X_ndV7nNcV_rbOPJBEN4Io0wlcgTk2vsPdhNfxhGiCZ7pkqToSFwycWliRMjM-NLmJSyJcG1QNCfv94qOdc6BszQ?key=IVx1y8CKchDT7rDFWSNfOpRh" alt=""/></figure>



Bitcoin’s magic affected all sorts of people. “Mr Bitcoin,” a drug dealer who did business via Silk Road out of an internet cafe in Los Angeles, told the filmmakers:



“I think of it as a global thing when I’m on the computer — I’m doing business with the world. When I first heard about it, I was laughing about it. It took me a week to just even think about this for real…I mean, I&#8217;m not gonna lie — I get booty off this. I kind of like talking about this stuff with girls, like girls be like, ‘That shit is hot,’ and like, ‘You&#8217;re not on your street, and you got a little nerd knowledge; this is great.’”



But if nostalgia is really about severe homesickness, as Krauss suggests, then what is “home” in the Bitcoin context?



Watching The Rise and Rise of Bitcoin, the answer is clear: our homes, literally.



The film starts with Daniel showing off his home mining setup — a handful of GPUs sprawled across a basic table in his basement.&nbsp;



Then, as the film progresses and the mining difficulty rises alongside bitcoin’s price, he upgrades to some of the first ever ASIC rigs, still in his basement.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdl6t1YHPEZsh_SL0JkQD68Xovm0f5NqlL6BWZ7LkEVRuS8ES0HBbnTFy3QPAtgCtbWuuNRAUA-iCBTVVtZpJGDjH2qVyx938RfwwlvrLCI_vDvQ5w6J9FlzdfVtQqv3KHZtWdm3w?key=IVx1y8CKchDT7rDFWSNfOpRh" alt=""/></figure>



By the end, though, Daniel is forced to give up mining altogether, having been actively priced out during filming. “When I started, Bitcoin mining was a hobby for geeks, now it’s a big business. In order to continue mining and continue playing the game and be competitive and profitable, I would have to spend hundreds of thousands of dollars on gear.”



“The 18 miners I ordered from Avalon never arrived and the units from Butterfly Labs took over a year to ship. By the time I got them, Bitcoin mining was so competitive that I would never be able to mine back all the coins I used to buy them. As my new units are arriving, I’m selling them for bitcoins to try to recoup what I can.”



Obviously, there’s no putting the genie back in the bottle when it comes to bitcoin mining. The odds are stacked even further against home miners these days, and it’s questionable whether bitcoin’s initial low-fee feature was ever going to be sustainable with widespread adoption.



But if you’re nostalgic about Bitcoin from the early-mid 2010s, I’d offer two potential cures: go and use bitcoin as money — not an investment — and start tinkering around with open-source mining rigs.&nbsp; Aside from bringing Bitcoin back home, literally and figuratively, I hear they <a href="https://blockworks.co/news/solo-bitcoin-miner-solves-block">can be incredibly lucky</a>.



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Two cures to treat Bitcoin nostalgia for the 2010s

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Not many can say their parents got them involved in Bitcoin, but Jack Mallers can. 



His grandfather, <a href="https://creators.spotify.com/pod/profile/moneymatterspod/episodes/EP-9-WILLIAM-MALLERS-JR-e2g0li9/a-aavuk9s?_bhlid=cd4ca9c0f43302c29cf104a8c9689e1ecb7ee118&amp;utm_campaign=why-jack-mallers-is-a-bitcoin-legend">William Mallers Sr</a>., was a former Chicago Board of Trade chair, and his son William Mallers Jr., Jack’s father, bought his first bitcoin in August 2013, when it was under $100. 



Jack’s mother, Brooke Royce-Mallers, created a series of meet-ups in the Windy City alongside Empowered Law CEO Pamela Morgan, which included one fateful afternoon when <a href="https://x.com/pete_rizzo_/status/1787875215696887828">Andreas M. Antonopoulos</a> showed up. According to Jack, the first time he truly understood Bitcoin was when the GOAT of all Bitcoin educators talked to him about the power of the tech.



One of my favorite Mallers moments was on Christmas Day 2013, when Jack and his siblings received gift cards purchased with bitcoin. The price was $1,200 back then, but the move was priceless and timeless.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">2/ Here’s Jack and his siblings on Christmas day in 2013. These are gift cards his parents purchased him with <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a>. The price was $1,200 <a href="https://t.co/ZDv8XuTLIm">pic.twitter.com/ZDv8XuTLIm</a>&mdash; The Bitcoin Historian (@pete_rizzo_) <a href="https://twitter.com/pete_rizzo_/status/1823408001870344421?ref_src=twsrc%5Etfw">August 13, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



It’s nearly cliché by now, but Jack didn’t dive into Bitcoin right away.



He had enrolled in St. John&#8217;s University in New York but soon dropped out. Instead, he returned to Chicago to attend coding camps when he realized he was more interested in technology than academics.



At 18, and after coding, he signed up for a school for entrepreneurs and launched his first app: <a href="https://x.com/pete_rizzo_/status/1823408094082163178">ChessExplained</a>. It was a unique way for coaches to teach the sport (or is it a discipline?), and help with students trying to advance their skills.



Here’s a demo from nine years ago:



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-4-3 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="jackschess.com account demo" width="1024" height="768" src="https://www.youtube.com/embed/xeY0sVaif3w?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
</div></figure>



It didn’t work out, but by 2016, Jack was ready to go all in on Bitcoin.



His big idea? Using &#8220;the most revolutionary technology we&#8217;ve seen since the internet&#8221; to <a href="https://x.com/pete_rizzo_/status/1823408151388975564">disrupt the gambling industry</a> with an app called Zero House Bets. Jack&#8217;s biggest frustration came from the hefty commissions that websites like Bet Online charged.



He saw Bitcoin as the fix — It was cheaper, faster, and didn’t need a middleman to move money.



<h2 class="wp-block-heading">Lightning strikes</h2>



Zero House Bets didn’t take off, either. So, Jack built his first Lightning app, Zap, from his bedroom.



Here’s the early website, launched when BTC was around $1,000.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfwD-zj_T438rjg7Ah2Gu-EYGK1DpmFdAYVuQySol4It6kQJNWCD07aYnTiPsEAdXTMunMTaqVW4g1PKCtKDKC0q6Pazoqjq6mTB1VK7HKaqgh1lNNALBYfjBT9GL1Vf5NcyfomFg?key=2iW9JgqerEsrARfkTKEo84sz" alt=""/></figure>



Jack went all-in on Bitcoin and the Lightning Network. One of his earliest tweets is a manifesto to why the network would never die. “Bitcoin will succeed,” he wrote, “because I won’t let it die. The developers, unbanked, hodlers, and millennials, won’t let it die.”



He tweeted: “What’s really going parabolic is the number of people willing to fight for Bitcoin and all it stands for. Price has no choice but to follow.”



In 2018, when some still doubted Lightning&#8217;s viability, Jack made one of the world&#8217;s first Lightning purchases.



The Lightning Network wouldn’t be here today if it weren’t for people like Jack. For example, here’s a map of the protocol’s first 100 nodes. The one encircled is his company, Zap.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdWOrjKcf0xbBQglVaGMWdBOgwhPmsYR-MQ-QfL_TH6d97PTuq9oMLUpIA2HMWBfRdLbSJmJCdt7PO11eGfbWTuKn3aTuDMHI2hwNUzVAUSE_ndQ4J7WtC2R_X8MkGkYOFrwKth?key=2iW9JgqerEsrARfkTKEo84sz" alt=""/></figure>



But Jack wasn’t playing around — he saw Zap becoming the app to take on giants like Venmo and Visa. Check out this 2019 <a href="https://x.com/pete_rizzo_/status/1823408288848920710">sketch</a> for what would become his baby, and one of the biggest companies in Bitcoin: Strike.&nbsp;



By 2020, Jack had raised $3 million for Strike.



What started in his mom&#8217;s basement had grown into a company with developers and users. Strike&#8217;s user base soon exploded, attracting endorsements from Bitcoin fans and celebrities.



In 2020, NFL star Russell Okung announced he would use Strike to become the first NFL player to get paid in BTC.



<h2 class="wp-block-heading">El Salvador</h2>



Then came one of the most important speeches in Bitcoin history.



The stage: Miami. The year: 2021. Jack jumps on, sporting a blue soccer team jersey for El Salvador. I remember seeing Jack and Pomp in a corner before the speech. They seemed to be smiling at something, and reviewing slides.



There was a lot of hype, but no one saw this announcement coming.



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/_59hrgTiRJU?si=5p9FJYWZ43HepKQ3" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







El Salvador was not only investing in BTC, but making it legal tender. It became the first country in the world to legalize Satoshi’s creation, thanks in part to Jack’s influence on the ground.



Jack&#8217;s app was pivotal in making Bitcoin history. He appeared on <a href="https://www.youtube.com/watch?v=Hlj-QQgbW90&amp;t=2s">60 Minutes</a>, discussing how he met the president of El Salvador and what it meant for a nation to embrace an open financial network.



With Jack&#8217;s help, El Salvador has since stacked over 6,100 BTC. President Nayib Bukele keeps purchasing 1 BTC <a href="https://blockworks.co/news/president-nayib-bukele-bitcoin-maxi">every single day</a>. The country&#8217;s holdings are worth almost $520 million today.



Who would’ve thought that a Chicago-native coder who built a chess app would go on to help a nation stack bitcoin? It certainly wasn’t on my bingo card for 2021.



Updated April 22, 2025 at 11:15 am: Corrected information about Jack Mallers&#8217; family history.



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The dropout who dared: How Strike is rewiring global money

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We’re coming up on 14 years since Satoshi Nakamoto’s last-known correspondence — an email to early Bitcoin developer Mike Hearn saying that he’d “moved on to other things.”



Remember, the “known” there is doing a lot of work. The existing <a href="https://satoshi.nakamotoinstitute.org/">compendiums</a> of Satoshi’s writings will probably go unfinished forever. There’s likely still loads of private emails, direct messages and other interesting stuff that have never been made public (and with good reason).



The most recent dumps of unreleased Satoshi texts came early last year, when <a href="https://mmalmi.github.io/satoshi/">Martti Malmi</a> and <a href="https://bitcoinmagazine.com/technical/bitcoin-adam-backs-complete-emails-satoshi-nakamoto">Adam Back</a> provided years of emails as evidence for Crypto Open Patent Alliance’s case against Craig Wright.



Michel Bauwens, the deep-thinking founder of the P2P Foundation, is another figure apparently sitting on some Satoshi emails, as we just learned from a lengthy <a href="https://blog.uncommons.cc/cryptoflight-vol-10-eng/">interview</a> with Uncommons released this week.



<h2 class="wp-block-heading">Bauwens snubs Satoshi</h2>



In January 2009, Satoshi <a href="https://www.metzdowd.com/pipermail/cryptography/2008-November/014853.html">shared</a> the first release of Bitcoin via the Metzdowd cryptography mailing list, where he’d spent months discussing his white paper and overall vision for the project.



It took five weeks for Satoshi to <a href="https://web.archive.org/web/20110824063228/https://p2pfoundation.ning.com/forum/topics/bitcoin-open-source">post</a> about the release to the P2P Foundation’s forum and send a copy to the foundation’s research mailing list. The latter was a lengthier message which drew parallels with the history of information security.&nbsp;



“Before strong encryption, users [of time-sharing systems] had to rely on password protection to secure their files, placing trust in the system administrator to keep their information private,” Satoshi wrote. “Privacy could always be overridden by the admin based on his judgment call weighing the principle of privacy against other concerns, or at the behest of his superiors.”



The need for trust disappeared with strong encryption, which made unauthorized access “physically impossible, no matter for what reason, no matter how good the excuse, no matter what. It&#8217;s time we had the same thing for money,” he said.



As it turns out, Bauwens says Satoshi contacted him in the leadup to that post.&nbsp;



“It was not that intense,” Bauwens elaborated. “Satoshi wrote me a few times [and] one of the emails was about explaining why he was publishing his white paper on our site. And offering me a few bitcoins. Unfortunately I didn’t answer that proposal.”



Perhaps that had something to do with how long it took for Satoshi to post on the P2P Foundation forum.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcnAVlKiwKqO_3x28k8QWDtMoeobLYIuBaOXT1od8CKvSGI1cdtw3uBngNvU_Jzoxanp8BwjGeYD61D_0fp1Dcb1DrP1C_V2OrWkrFcTiuUZDPKMdFbAE_x6EzJ8DsK3z173lOs9Q?key=_uN-cGmBdJtOjpOG2IGQwRiA" alt=""/><figcaption class="wp-element-caption">Satoshi’s only posts on the P2P Foundation forum were in <a href="https://web.archive.org/web/20140308001444/http://p2pfoundation.ning.com/forum/topics/bitcoin-open-source">this thread</a>, which he opened more than a month after the Genesis block.</figcaption></figure>



“And then he wrote me again when the Japanese guy was outed. Satoshi said ‘I&#8217;m not that person.’ And the third time he said ‘I&#8217;m going to write to you,’ but he didn&#8217;t. But I was the first person to tweet about Bitcoin apparently.”



Bauwens is referring to the <a href="https://blockworks.co/news/dorian-nakamoto-media-frenzy">story of Dorian Nakamoto</a>, the Japanese-American systems engineer falsely identified by Newsweek in 2014 as Bitcoin’s creator.



Around that time, three of Satoshi’s online accounts were believed to have been <a href="https://blog.bitmex.com/satoshis-2014-email-hack/">hacked</a>, including his P2P Foundation forum account, which had been used to post a message stating that they were not Dorian.&nbsp;



So, it seems Bauwens received a similar email from Satoshi’s hacker alongside the fake forum post. The hacker also contacted figures including Gregory Maxwell, Peter Todd and Bitcointalk admin Michael Marquardt. It could also be that Bauwens’ third Satoshi email came from the same person.



In any case, Bauwens had early misgivings about Bitcoin’s energy consumption, but saw promise. “I was not excited about…like the energy requirements that were embedded in it and stuff. But I was excited that it was the first globally scalable, socially-sovereign currency that was not created by a firm, not by the state.”



He went on to laud Bitcoin’s open accounting ecosystem — the universal ledger — as its key innovation. “Where we can embed thermodynamic flows and contributory flows. So now we can see ‘curren-sees.’”&nbsp;



“I saw this as a post-capitalist invention. It doesn&#8217;t mean anti-capitalist. It means [to] transcend and include. It means giving it a place, but embedding it in something that has a higher complexity and that can constrain it. And I think this is the right way, we&#8217;ve been anti-capitalist for 200 years. I don&#8217;t think it was very successful.”&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdek6UfNFLyglh8HxWO3cYV9MLl1ci4e-I3AnUGMsy8SIK9dyUkkspnkHHf9dBJBriDUMLFflT5JKPVDomnPWaULyHn6eeohDpo46CChDf9HKh8SlVNSpLUHGmR3aZfXX-jBsRTcQ?key=_uN-cGmBdJtOjpOG2IGQwRiA" alt=""/><figcaption class="wp-element-caption">Bauwens has never stopped interacting with the complexities of Bitcoin</figcaption></figure>



Some parts of the interview give pause. Bauwens states that “12 people own 70% of bitcoin, so it’s still about a few people who have the most commodity power,” which seems to be based on a misunderstanding of the 10% or so of BTC’s <a href="https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html">supply</a> sitting in exchange-controlled hot wallets.



Still, the entire interview is worth a read. It covers Bauwens’ early philosophical journey, capitalism, society, and how Bitcoin is an exit strategy that enables “arbitrage between nation states.”&nbsp;



“And it has been democratized, this is also important,” Bauwens said. “It&#8217;s not just like transfinancial capital, which already has existed since the 1980s.”



<h2 class="wp-block-heading">Timechain Tale</h2>



Tomorrow (April 18) marks the 16th anniversary of some of the only known bitcoin transactions made by Satoshi.



Satoshi and Hearn had been transferring bitcoins back and forth in a live test, alongside a <a href="https://plan99.net/~mike/satoshi-emails/thread1.html">discussion</a> about potentially adding comments to transactions.



Hearn sent Satoshi 32.51 BTC, who returned them with an additional 50 BTC, then Hearn sent the 50 BTC back to Satoshi, making them even.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdk4e3Qjvjb3oYbDvWYFH3_WIMOBYB0FHOPk_P_WKZoR3z5reeGjy3bJa1oYV4yd42rzuzOYg-sWK-Dmo9MwEUzqNrAnpeogFQY2GEVoZRxS4tLw4Jpc-KYH1c8BiaWZ87ZYl3Y?key=_uN-cGmBdJtOjpOG2IGQwRiA" alt=""/></figure>



Remember: If “Satoshi” or <a href="https://www.nytimes.com/interactive/2024/08/14/technology/elon-musk-ai-deepfake-scam.html">anyone else</a> emails you a promise to double your bitcoin in 2025 and beyond, do not believe them! Not all the transactions appear to have involved the same bitcoin address, but you can still see the 50 BTC from Hearn sitting in Satoshi’s <a href="https://mempool.space/address/1PhUXucRd8FzQved2KGK3g1eKfTHPGjgFu">address</a> to this day. Hearn’s <a href="https://mempool.space/address/1JuEjh9znXwqsy5RrnKqgzqY4Ldg7rnj5n">address</a> also contains old coins, but we understand that he no longer has the keys.



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Living history: We’re still discovering Satoshi correspondence

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Liberland has fallen.



It’s a tale almost as old as Bitcoin itself. One day, you’re buying just a little bit of bitcoin. Stacking sats on Saturdays.&nbsp;



Suddenly, you mistakenly catch a glimpse of a video about stablecoin yield in your feed. The algorithm’s fault.&nbsp;



Then, a screenshot of generational memecoin gains. A string of governance airdrop tweets follow fast; farmers rich, KOLs richer. You? Fully FOMO&#8217;d.



Congratulations! You’ve been radicalized by the Web3 cabal.&nbsp;



All of your remaining bitcoin has been reallocated to the top 50 altcoins, weighted by their respective partnerships and memorandums of understandings. “E/acc” has been unironically added to your X handle. WAGMI.



<h2 class="wp-block-heading">On This Day — Liberland goes Bitcoin</h2>



It’s enough to make you retch. After checking in on Liberland, the libertarian Balkan micronation founded in 2015, I fear it has suffered a similar fate.



It’s not that Liberland was ever exactly sold as a Bitcoin maximalist paradise. Established under Terra nullius rules, Czech politician and activist Vít Jedlička initially <a href="https://www.nytimes.com/2015/08/16/magazine/the-making-of-a-president.html">positioned</a> the “three-square-mile teardrop of no man’s land” on the western bank of the Danube as a libertarian refuge for the entire world. A tiny sanctuary for “honest people,” free of big government, central banks and taxes. 



It’s easy to see how bitcoin once fit into that vision. Bitcoin was, and still is, symbolic of what’s possible under laissez-faire capitalism — proof that people can change the foundational structures of our world by taking matters into their own hands.



And while there’s no “legal tender” of Liberland, bitcoin was indeed to be accepted as money within its border, alongside practically all other currencies, even an official Liberland cryptocurrency “like bitcoin” somewhere down the line, as Jedlička himself red-flagged in initial media appearances.



Perhaps Jedlička and Satoshi shared a kindred audacity. Liberland sounds like just as much of an impossible dream as Bitcoin once did.



After arrests, court battles, attempted settlements, festivals and temporary exiles, the Free Republic of Liberland today <a href="https://liberland.org/">boasts</a> more than 1,100 registered citizens, more than 4,000 e-residents, and over 700,000 applicants on their waiting lists. But as one <a href="https://unherd.com/2023/07/inside-liberland-europes-bitcoin-micronation/">report</a> put it in 2023, very few Liberland citizens actually live there. Instead, there’s a “handful of activists moored downstream on a houseboat, under the close supervision of the Croatian police.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">This weekend, we celebrated the 10th anniversary of the Free Republic of Liberland — a sovereign state nestled between Croatia and Serbia on the west bank of the Danube River. It was an incredible experience! Congratulations to President Vit Jedlička (<a href="https://twitter.com/JedlickaVit?ref_src=twsrc%5Etfw">@jedlickavit</a>) on a decade of… <a href="https://t.co/XSEext3xMA">pic.twitter.com/XSEext3xMA</a>&mdash; Brock Pierce (@brockpierce) <a href="https://twitter.com/brockpierce/status/1912288756222009810?ref_src=twsrc%5Etfw">April 15, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Liberland celebrated its 10th birthday this past weekend</figcaption></figure>



But whatever spiritual overlap there was between Bitcoin and Liberland (which had attracted many to its remote European floodplain in the first place), it’s all but gone from its public messaging.&nbsp;&nbsp;



One might’ve expected the ties between Liberland and Bitcoin to strengthen over the past decade. Especially so, considering bitcoin is up nearly 200x since early <a href="https://www.context.news/digital-divides/breakaway-balkans-micronation-dreams-of-crypto-future">reports</a> suggested that Liberland held much of its reserves in BTC. That would surely have made the microstate relatively wealthy if true.



(For what it’s worth, Liberland’s known bitcoin <a href="https://www.blockchain.com/explorer/addresses/btc/13H2VmPrmoucaEgCCoimCPmPU9a7CaMyuw">address</a> contains less than $2,000 worth of bitcoin right now but in total has seen 275 BTC inflows — $23 million at current prices. Liberland deposited its last bitcoin to crypto exchange Bitcoin Suisse in August 2020.)



Today, there is no “bitcoin” on Liberland’s official website, barring what seems to be a single mention about it being a preferred currency alongside Liberland’s own coin.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdQcNd74Xeypm1sIX7LqSpdyHijci9Sq7bzpeeKvv0Is5Ns5UVU5OutQiTbwsAI9I_ioOC_90rUoWtHn7LLilnwq0C-dEvTk4lwHRCrFFESqYgtme395GpOBRjoGyG_R4bkZicGkg?key=ZFawP0Bw9GgBkQFWfWYH0xr_" alt=""/></figure>



There’s blockchain governance, and then there’s blockchain government.



Instead, the worst of blockchain’s buzzwords now overrun Liberland.org: soulbound NFTs that represent citizenship, on-chain governance that enables “decentralized hyperdemocracy,” all powered by an “operational token similar to DOT or ETH,” which users can bridge to TRX, and a small number of other chains.



It took only 10 years for Liberland to go from an economy with Bitcoin at its base, as President Jedlička <a href="https://news.bitcoin.com/liberland-bitcoin-truly-base-economy/">said</a> in 2016, to an economy built around an inflationary governance token, Liberland Dollars, issued on a Polkadot fork called the Liberland Blockchain.&nbsp;



A secondary token, Liberland Merit, is meant to represent the ownership of the actual land.&nbsp; The site promises that one day, the tokens can be “converted into tokenized political power,” giving citizens additional avenues to vote.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Many friends have recently asked me about my involvement with <a href="https://twitter.com/Liberland_org?ref_src=twsrc%5Etfw">@Liberland_org</a> , and I am indeed very happy to see the community elect me as the Prime Minister of Liberland. My understanding of Liberland is as follows: Liberland is not just a country; it is a manifestation of a…&mdash; H.E. Justin Sun 🍌 (@justinsuntron) <a href="https://twitter.com/justinsuntron/status/1844664803945775256?ref_src=twsrc%5Etfw">October 11, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Liberland’s Congress recently elected Justin Sun prime minister for the <a href="https://protos.com/justin-sun-elected-prime-minister-of-liberland-for-a-second-time/">second</a> time running.



As it stands, Liberland is essentially a token economy experiment for a blockchain-powered nation that doesn’t really exist. Yet.



Still, the government <a href="https://docs.liberland.org/blockchain/tokenomics-primer">receives</a> vested token unlocks every month to fund itself and its initiatives (which include paying for token listings on crypto exchanges, marketing and incentives) in much the same way as VCs do from their portfolio Web3 companies. The coin has a $2.1 million market cap right now.



Just as there are no true Scotsmen, there is, of course, no one true representation of “Bitcoiner.” And no doubt, there are many among Liberland residents, believers, supporters and investors.&nbsp;



All that only makes the current iteration of Liberland, with all of its mumbo jumbo, that much more of a letdown. Luckily, it’s never too late to adopt the Bitcoin standard — although good luck ever getting the votes.



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A decade in, Liberland needs the Bitcoin standard more than ever

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The technological singularity, when men will merge with machines to shed all “limitations of our biological bodies and brain,” may only be 20 years away, says Ray Kurzweil.



Something to look forward to! Meanwhile, Bitcoin has already brought about something similar.&nbsp;



Fourteen years ago today, the price of bitcoin traded at under dollar parity for the last time ever — an event that we’ll call “the Coinvergence,” because “financial” and “economic” singularities were already taken.



<h2 class="wp-block-heading">On This Day — Dollar parity</h2>



To be clear, this was the second time that bitcoin had traded above $1.



Bitcoin spent about a week above a dollar in mid-February 2011 — around the same period that blogger Plato was planning the <a href="https://blockworks.co/news/plato-bitcoin-road-trip-price">first ever Bitcoin road trip</a> — before falling back to under $0.70 by early April.



While dollar parity didn’t immediately stick, the first time around led to Bitcoin’s second-ever Slashdot feature. “Online-Only Currency BitCoin Reaches Dollar Parity,” one user <a href="https://news.slashdot.org/story/11/02/10/189246/online-only-currency-bitcoin-reaches-dollar-parity">wrote</a>.&nbsp;



“In only two years, this open-source currency has gone from having no value at all to one with not only an open market of competing exchanges, but the ability to buy real goods and services like web hosting, gadgets, organic beauty products, and even alpaca socks.&#8221;



Of course, there isn’t anything particularly special about 1 BTC reaching $1. As one Bitcointalk poster <a href="https://bitcointalk.org/index.php?topic=2734.20">commented</a> in a “parity party” thread, “we humans like neat number,” even if it awarded bitcoin a modest market cap of under $6 million.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeOSE_o323cBnfTPXFdBsGkV0bmDLo7b7lvRUczO6ar5Kc7WOVWd_7fwZoxPwO3L0iPSSAc-ZNtnG8S3tyC700Wtfv0WMuEqTzQDPzidR5Lu4xH-XbPlN1LLKKo8DleCr3WC1PnfQ?key=m42APRgQYans0qnkgty-Ltkk" alt=""/><figcaption class="wp-element-caption">Preparations for bitcoin reaching dollar parity had been underway for months</figcaption></figure>



Dollar parity is, then, mostly symbolic. It was bitcoin’s first great event horizon: A dollar bought more than 1,300 BTC in late 2009, but only a year and a half later could buy just one. The US dollar had technically fallen by 99.9% against bitcoin in 24 months. Bullish.



What’s most impressive is that bitcoin never again saw under $1. At least, that’s not counting the flash crash on Mt. Gox in June 2011, when its BTC order book briefly <a href="https://blog.bitmex.com/the-june-2011-bitcoin-flash-crash/">collapsed</a> from over $17 to $0.01 amid a hacking incident. The exchange later rolled back trading histories to make users whole.



Kurzweil similarly <a href="https://web.archive.org/web/20140316213301/http://hfg-resources.googlecode.com/files/SingularityIsNear.pdf">describes</a> a point of no return with AI. Once artificial intelligence eclipses biological intelligence, an augmented human race will eventually saturate the entire universe with man-machine know-how — fulfilling our destiny to reorganize the very patterns of matter and energy to maximize computation forever and ever.



“We will determine our own fate, rather than have it determined by the current ‘dumb,’ simple, machinelike forces that rule celestial mechanics,” he wrote in his 2005 book.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdU5EpHt9JkXFWIvOKSfIjL-Lz_SWKW24dCJMSrlrlSmvUA1BuvdDYr8j6FS_7i2zFZQmc5KK5Ft154uGJBydK264J2lw7qi_fdc9so-ardhihkpc0TJJgrpiu7ATBQzmtP7CzlbA?key=m42APRgQYans0qnkgty-Ltkk" alt=""/><figcaption class="wp-element-caption">Source: TradingView</figcaption></figure>



By some point in 2045, Kurzweil’s technological singularity will have transformed “every institution and aspect of human life, from sexuality to spirituality.”&nbsp;



On the anniversary of the Coinvergence, it’s hard to say that Bitcoin hasn’t already done all that in some form. Bitcoiners indeed determined their own fate by rejecting the dumb forces that rule financial mechanics.&nbsp;



Now, what comes next is the real question: the technological singularity, or bitcoin’s closest big milestone of $1 million per coin?



We’ll need a new name for that one — how about the “Satoshilarity”?



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Crypto Singularity: How Bitcoin redefined value at $1

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Coinbase brought bitcoin to Wall Street long before BlackRock and Fidelity.



Four years ago today, Coinbase went public at a $86 billion valuation — a figure that briefly jumped to $100 billion to rival Facebook’s debut in 2012.



And for all of the business savvy shown by CEO Brian Armstrong and his executive team, Coinbase’s story is one of harnessing Bitcoin’s natural inertia.&nbsp;



<h2 class="wp-block-heading">On This Day — Coinbase goes public</h2>



At the time of Coinbase’s public debut in April 2021, Armstrong had <a href="https://www.benzinga.com/markets/cryptocurrency/21/09/23131441/1-000-millionaires-were-created-when-coinbase-went-public-says-ceo-brian-armstrong">commented</a> that the listing had minted a thousand fresh millionaires overnight.&nbsp;



It had also made Armstrong $16 billion <a href="https://edition.cnn.com/2021/04/14/business/brian-armstrong-coinbase-ceo-billionaire/index.html">richer</a> by way of his 40 million Coinbase shares, and allowed early investors, employees and other backers to cash out billions of dollars of their own on day one.



They’d earned it: Armstrong had led the firm through the brimstone — regulatory crackdowns, fearmongering, climate hysteria and community infighting — for nine years leading up to Coinbase’s Nasdaq debut. They emerged on the other side, headfirst into a powerful bull market.&nbsp;



In a <a href="https://bitcoinhistorynl.beehiiv.com/p/bitcoin-in-1991?utm_source=bitcoinhistorynl.beehiiv.com&amp;utm_medium=newsletter&amp;utm_campaign=bitcoin-in-1991&amp;_bhlid=95cd01548d98a1736dec9b2524894079c46ad259">past edition</a> of Supply Shock, we looked back at Armstrong’s post on Hacker News from March 2012, in which he searched for a ride-or-die co-founder.



Coinbase was Bitbank back then, a PayPal-like app for sending and receiving bitcoin via email. Three months after the Hacker News post, Coinbase was Coinbase, and Armstrong had <a href="https://allthingsd.com/20120629/betting-on-bitcoin-coinbase-wants-to-be-the-paypal-of-the-internet-only-currency/">raised</a> $165,000 for the startup to get off the ground.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">10/ After meeting with more than 50 possible partners (it’s a lot like dating), I met <a href="https://twitter.com/FEhrsam?ref_src=twsrc%5Etfw">@FEhrsam</a> through Reddit and we set out to build Coinbase. <a href="https://t.co/7PVzUEFzYb">pic.twitter.com/7PVzUEFzYb</a>&mdash; Brian Armstrong (@brian_armstrong) <a href="https://twitter.com/brian_armstrong/status/1382432462677045248?ref_src=twsrc%5Etfw">April 14, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Swapping bitcoin for US dollars was the business model that stuck. It took less than a year for Coinbase to hit a key milestone: Users had <a href="https://venturebeat.com/business/coinbase-bitcoin/">exchanged</a> $1 million worth of bitcoin in a single 30-day period by February 2013. Coinbase revenues have been positively correlated with the price of bitcoin ever since.



Eventually, those exchange services morphed into the full-blown trading and financial suite Coinbase offers today.



So if Brian Armstrong was Ben-Hur and Coinbase was his chariot, then Bitcoin would be the <a href="https://www.pololine.com/articles/the-horses-of-ben-hur-and-the-most-epic-scene-in-movie-history/#:~:text=The%20four%20beautiful%20white%20horses,of%20the%20lovely%20mare%20Mira.">four white horses</a> of Ilderim. Bitcoin even set an all-time high as COIN went public — proof of their symbiotic relationship regardless of whatever <a href="https://www.coindesk.com/consensus-magazine/2023/05/17/the-blocksize-wars-revisited-how-bitcoins-civil-war-still-resonates-today">sides</a> were taken during the Block Size War.



Looking back, “PayPal for Bitcoin” was an elevator pitch with a clear expiration date. On a long enough timeline, all companies will become bitcoin companies — including PayPal itself, which began rolling out crypto functionality in the months leading up to Coinbase’s direct listing.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">2/ The Coinbase journey started when I read the Satoshi whitepaper while I was home for Thanksgiving in 2010. As I read it, I realized that crypto had the power to unlock a future where economic freedom was a reality for everyone.&mdash; Brian Armstrong (@brian_armstrong) <a href="https://twitter.com/brian_armstrong/status/1382428343291629569?ref_src=twsrc%5Etfw">April 14, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



Coinbase is now working to run back its valuation, having somewhat diversified revenues away from bitcoin trading fees, and is currently worth about half its April 2021 mark.



At the same time, we’re now on track to see more crypto companies go public over the next year or two, starting with stablecoin issuer <a href="https://blockworks.co/news/circle-files-s1-ahead-of-ipo">Circle</a> and potentially trading platform <a href="https://www.etoro.com/news-and-analysis/press-releases/etoro-announces-confidential-submission-to-sec-of-draft-registration-statement-for-proposed-ipo/">eToro</a>.&nbsp;



There’s a clear difference, however. Bitcoin doesn’t represent the beating heart of those firms, at least not in the same way it was for Coinbase in its formative years.&nbsp;



— David



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">A Historian’s View</h2>



“On a long enough timeline, all companies become Bitcoin companies,” David writes above. For Coinbase, however, it seems to be taking longer than usual.&nbsp;



Certainly, there are positive aspects of the company. Coinbase has managed to safeguard the industry’s bitcoin, and its reputation, for over a decade. Counter to the Ben-Hur analogy, I’d argue Coinbase is really the mini-van of the crypto industry — safe, reliable, the uncomfortable living room you sit in with extended family.



That said, the legacy of Coinbase (from a Bitcoiner’s view) arguably hangs in the balance.&nbsp;



Case in point, you can look at its anemic bitcoin investments. Coinbase HODLs <a href="https://bitcointreasuries.net/">fewer BTC than Tesla</a>, despite its 10-year market advantage. Then there’s its technical ambivalence to Bitcoin. Recall that Coinbase was among the first bitcoin exchanges to go crypto, prioritizing developments and listings on Ethereum — it’s invested untold millions into L2s, Solana, and other “competing L1s.” Yet, despite the fact that bitcoin remains a significant part of its business (driving 30% of all transaction <a href="https://s27.q4cdn.com/397450999/files/doc_financials/2024/q4/Q4-24-Shareholder-Letter.pdf">revenue</a> last year), the company’s product and development roadmap all but ignores it. Coinbase is perennially the last mover on upgrades like Lightning and Taproot. Coinbase at times seems like it’s trying to make amends, like when its head of custody made a surprise <a href="https://x.com/Pledditor/status/1911001856433660187">appearance at the OP_NEXT conference</a> this weekend. Other times, it simply pays lip service to bitcoin (it’s a running joke that Brian Armstrong only says “bitcoin” when forced).&nbsp;



On multiple fronts, it’s hard to argue that Coinbase’s legacy won’t be something similar to AOL, an early web success story that completely fades from internet relevance for failing to build its architecture in the same way that built the most value in the long run. (You can read the latest investor hand-wringing about <a href="https://cointelegraph.com/news/layer-2-reason-for-ethereum-declining-investment-appeal-crypto-venture-capitalist">the problems with L2s</a>.)



Like most of the other major exchanges, Coinbase is investing in scaling blockchains. We’ll see how many memecoins need to go to zero before it starts taking Bitcoin seriously again.



— Pete



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Coinbase has come a long way from ‘PayPal for Bitcoin’

This is a segment from the Supply Shock newsletter. To read full editions, <a href="https://blockworks.co/newsletter/supplyshock" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Bitcoin’s first Ponzi scheme was nothing special — but it was early.



After the 1906 inception of the international reply coupon, it took 14 years for Charles Ponzi to come along with his <a href="https://www.smithsonianmag.com/history/in-ponzi-we-trust-64016168/">legendary</a> scheme, which he peddled across Boston society to the tune of $20 million at the time ($319 million in today’s money).



Meanwhile, it only took Trendon Shavers, aka Pirateat40, less than three years to pull off something similar on the Bitcoin blockchain: Bitcoin Savings &amp; Trust.



<h2 class="wp-block-heading">On This Day – Bitcoin Savings &amp; Trust&nbsp;</h2>



Shavers originally launched the scheme as First Pirate Savings &amp; Trust in November 2011, having cultivated an online persona of a savvy over-the-counter bitcoin trader in IRC channels and on Bitcointalk.



Bitcoin had opened the year at $0.30, hit $30 in June, and had since settled at around $3. Shavers’ supposed OTC desk was now running dry, with requests for more coins only “getting larger and more frequent.”&nbsp;



“Over the last few months I have been selling BTC to a group of local people,” Shavers wrote in his launch <a href="https://pastebin.com/yH0jr6KY">post</a>. “Now this is a ‘don&#8217;t ask don&#8217;t tell&#8217; group of people, so I can&#8217;t tell you exactly where and to whom the coins ultimately end up with, but so far it&#8217;s been pretty painless.”



To help source liquidity, he devised two ways to inspire early adopters to send him their bitcoin, starting at a minimum of 50 BTC ($150 then, $4 million now).



<ul class="wp-block-list">
<li>The “on-demand” tier would pay a 3.5% fee for filling buy orders over what the desk has available.</li>



<li>The “storage” tier would pay 1% per day for bitcoin sent to First Pirate Savings &amp; Trust, with a promise that “you can withdraw your balance at any time.”</li>
</ul>



As was the case with the original Ponzi scheme, initial inflows were rather small, only $60,000 in total over the first two months.&nbsp;



But after rebranding it to “Bitcoin Savings &amp; Trust” on this day in 2012 (with a new website) Shavers’ wallets saw that much on an average day, despite repeated warnings of the community, including <a href="https://bitcoinmagazine.com/business/ponzi-schemes-the-danger-of-high-interest-savings-funds-1338461999">from</a> Vitalik Buterin.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcVSRh9xXbGUjnpZ8nUZKHr8BqN4bpwt-Pg2qCs4Lxmu6UsQVdHYSyYDygREXaEff6H2bBuJlPQw_wZd72pVBvWkvYT2QpZcpGMn00SGIy2jS1WEb0D6L8sWakXDRtnMLYPpBsN?key=xm2WtSBqbG4DoznrxKgR4WvZ" alt=""/><figcaption class="wp-element-caption">Bitcoin’s push to $15 was interrupted by Bitcoin Savings &amp; Trust’s sudden closure, but BTC quickly rebounded.</figcaption></figure>



Just like the real Charles Ponzi almost a century earlier, Shavers never really did any of what he said. To go back in time a bit: Ponzi had promised up to 100% returns to investors who’d backed his wacky plan to arbitrage postage stamps between Italy, where they were cheap in the wake of World War I, and the US, where they were still expensive.



Ponzi couldn’t actually redeem his stamps for cash, or ship enough of them from Europe in any case. Still, he easily paid out interest with the waves of fresh capital, splitting the difference with a mansion, luxury car and a honeymoon vacation. Ponzi was sentenced to five years in prison.



Similarly, Shavers was simply selling coins to cover rent, car payments, shopping and casino gambling. Both plans were over and done in under 12 months.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXdgGVAZESOhrEeoQfAYeJIfmlI6CeFPdP09OBF4jHYJiBuHdeUSpfU1p3JVVvmEUWjVGEQ5CEWTlRCwyMnpsJRk96bvDPWwt0oa15wQW7p89qyeGzxOvLhBKmA57lbhKu5e7kDmrA?key=xm2WtSBqbG4DoznrxKgR4WvZ" alt=""/></figure>



Shavers’ username is a reference to a Jimmy Buffett song, “A Pirate Looks at 40,” which laments about a man born too late in history to get away with adventurous crimes.



The Feds calculated that Shavers, drawing from about 100 investors, had siphoned 193,000 BTC for himself, worth up to $1.5 million back then and $16 billion today (coincidentally similar to the BTC supposedly held by the US government). He was <a href="https://www.vice.com/en/article/lawyer-reveals-details-about-the-man-behind-bitcoins-45-million-ponzi-scheme/">fined</a> $40 million and sentenced to 18 months in prison.



Look onchain and you can still spot the robbing of Bob to pay Alice: On every other day, total flows for Shavers’ wallets would be divided fairly evenly between inflows and outflows. Coins in from new investors, coins out to older ones.



And you can still see almost 1.18 million BTC flowing through wallets linked to Bitcoin Savings &amp; Trust in its short history — the equivalent of around 10% of the entire circulating supply at the time.



At risk of searching for a silver lining in the fraud, there’s this: Whereas actual physical records of Charles Ponzi’s scheme are presumably long gone, we’ll at least forever have a perfect account of Bitcoin’s first-ever imitation.



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Bitcoin’s first Ponzi scheme would be worth $16B today

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When it comes to whether bitcoin is (or was ever) a bubble, the late John McAfee <a href="https://x.com/officialmcafee/status/938938539282190337">said</a> it best. 



“Those of you in the old school who believe this is a bubble simply have not understood the new mathematics of the Blockchain, or you did not [care] enough to try.



“Bubbles are mathematically impossible in this new paradigm. So are corrections and all else.”



That was in early December 2017, when bitcoin traded at under $17,000. It peaked one week later, stopping just shy of $20,000 to cap off a nearly three-year bull market.



Four months passed, and bitcoin slipped by two-thirds to less than $7,000, marking the first act of a bear market that lasted only one year.&nbsp;



If only Bloomberg and Bank of America chief investment strategist Michael Hartnett had listened to McAfee.



On this date in 2018, <a href="https://www.bloomberg.com/news/articles/2018-04-09/bitcoin-seen-popping-like-the-greatest-bubbles-by-bofa">Bloomburg posted an article</a> called “Bitcoin, the Biggest Bubble in History, Is Popping.&#8221; In analysis cited the article, Hartnett’s team plotted bitcoin’s most recent bull market against well-known asset bubbles — the Wall Street crash that ended the Roaring Twenties, the South Sea Company and Mississippi bubbles in the 18th century, and the often-cited Dutch tulip craze a century earlier.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXeYDx_tmaJE1uCWA6HV8er6ulG9wIriJCxr5AQDI1M_O10Sqp0gUHT-akgDAOxq6vwGBG6WO4bMlYODsj4K8GPGXh7RuwvEICquy1UUf8OMbfJzw-7pJee1HxdODymUavsOId2ODw?key=EWy5H33Q5JDD9iYKGCNA-ra2" alt=""/></figure>



But there are bubbles, and then there’s price discovery.



Dutch tulips had indeed exploded from a single guilder in early 1635 to 60 guilders two years later — a 5,900% rally — before collapsing by more than 99% in a matter of weeks.&nbsp;



Bitcoin, meanwhile, had managed 8,900% in the three years leading up to its December 2017 all-time high, starting at $224.



That’s more returns than the South Sea Company, Mississippi Company, and Roaring Twenties bubbles combined.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfXZkAKH0mY9GAxKLVU0Xj1P9LW97hNeR_CqkwN5BD4rlwQbIdMt4q6XvKBTiGQ3W4CxQHe3nLC9e82bFS5-UmmI0sQsVEVWfKxeeE1xaksRzNOigyV5ZoOSV1vpFEQJWi4fkxy?key=EWy5H33Q5JDD9iYKGCNA-ra2" alt=""/><figcaption class="wp-element-caption">The original BofA chart implied bitcoin was the “greatest asset price bubble” in history</figcaption></figure>



But where the South Sea and Mississippi Companies folded entirely after their individual markets tanked, and the Dow languished for nearly a decade through the Great Depression, bitcoin itself never suffered such a drastic fate.



Despite a string of bankruptcies for over-leveraged bitcoin miners — which helped to push bitcoin down by another 50% in the nine months following Hartnett’s note — bitcoin reversed course significantly over the next two quarters in what’s <a href="https://thedefiant.io/news/research-and-opinion/charting-history-s-rhyme-understanding-the-cyclicality-of-crypto-markets">considered</a> a short but legitimate bull market cycle.



Bitcoin returned to its December 2017 all-time high three years later almost to the day, whereas it took 15 years for the Nasdaq to do the same following the bursting of the dot-com bubble, and almost a decade longer for Japan’s Nikkei 225 after its own market mania in the late ‘80s.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXe4Ile4r5R8p2iFXwBrK28GoWDoYEgtpU7oWwWhmd106Isv-pnSfq6cuj_DbioayNjPjhMUJ8vfvIe3rY_-e4pH_yHjW0d5ZjXZ7SEEeM2V-lYIvfgU0b4lIOp364ZKTwluSCPHUQ?key=EWy5H33Q5JDD9iYKGCNA-ra2" alt=""/><figcaption class="wp-element-caption">Take that, tulips!</figcaption></figure>



Bitcoin has been declared <a href="https://bitcoindeaths.com/">dead</a> 67 more times since Bloomberg’s article, and it’s up more than 1,000%.



Which, of course, makes the notion of a “bitcoin bubble” mathematically impossible, just like McAfee said. RIP.



— David Canellis



<hr class="wp-block-separator has-alpha-channel-opacity"/>



<h2 class="wp-block-heading">Did You Know?</h2>



If Sir Isaac Newton — the famed mathematician who defined our modern laws of physics — was alive today, there’s a good chance you’d see him in the trenches.



Newton <a href="https://royalsocietypublishing.org/doi/10.1098/rsnr.2018.0018#:~:text=It%20is%20easy%20to%20imagine,of%20%C2%A320%20000%20or%20more">built</a> up a strong diversified portfolio of government bonds and stocks in the early 18th century, and he was even appointed as Master of the Royal Mint for more than 30 years due to his scientific achievements.



Despite this, Newton was still caught in a pump and dump for a stock he’d been holding for years — the South Sea Company.



The South Sea Company was a joint-stock government enterprise intended to stymie spiraling national debt by exploiting what were supposed to be massively lucrative trade routes with Spanish territories across South America.



Despite very low revenue at the time, hype in Britain quickly reached fever pitch and the stock went nearly 10x in the first six months of 1720.



But with no actual profits, it resembled a Ponzi scheme more than a bona fide company, while insiders manipulated the market for massive personal gain.&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcUePvht7vsqUCTIruoe1mle9rhUwOo6nbTa2L8JsawjCkumjUMVNQUzHVcoZD8g7YvFhKepIXnXJXz3RaPpdQeYIyYMXWPJ2hRkO35hmJyJwyMJ39bhEM4k-H97VHLQVX0Db8j?key=EWy5H33Q5JDD9iYKGCNA-ra2" alt=""/></figure>



<a href="https://newtonandthemint.history.ox.ac.uk/global-financial-world/newton-and-the-south-sea-bubble#:~:text=It%20is%20likely%20that%20Newton,out%20arrangements%20for%20the%20Company">Legend</a> has it that Newton had, unfortunately, cashed out too early, FOMO&#8217;d back in at the top, and bought massively on the way down, losing today’s equivalent of $25 million in the crash.



“I can calculate the motion of heavenly bodies, but not the madness of people,” he supposedly said, and forbade anyone in earshot from mentioning “South Sea” ever again.



If only they’d heard of HODLing in the 1700s.



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BofA’s blunder: How bitcoin turned a ‘crash’ into a 1,000% surge

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Heartbleed was a <a href="https://blog.cloudflare.com/heartbleed-revisited/">tiny but critical flaw</a> in the “heartbeat” extension of OpenSSL, the widely-used open source cryptography library. OpenSSL powers both Secure Sockets Layer (SSL) and Transport Layer Security (TLS) encryptions meant to protect sensitive data when using websites and other online services.



OpenSSL’s heartbeat is a type of ping — a tiny message passed back and forth between the user’s machine and the server they’re connected to — which proves the connection is alive.&nbsp;



A missing check for the length of that message meant that whatever was sitting in the target’s RAM could be siphoned, in plaintext, without a trace: usernames, passwords, cookies, or even bitcoin private keys.



As cryptographer Matt Blaze <a href="https://x.com/mattblaze/status/453422425968218112">put</a> it, Heartbleed “leaks data beyond what it’s protecting. So [it’s] worse than no [cryptography] at all.”



Heartbleed actually went undiscovered for two years. Initial estimates <a href="https://arstechnica.com/information-technology/2014/04/critical-crypto-bug-in-openssl-opens-two-thirds-of-the-web-to-eavesdropping/">suggested</a> that two-thirds of the internet was relying on OpenSSL at the time (2014), but not all of it was running vulnerable versions. 



More specific <a href="https://www.netcraft.com/blog/half-a-million-widely-trusted-websites-vulnerable-to-heartbleed-bug/">calculations</a> pointed to half a million affected websites, equivalent to around 17% of all SSL web servers globally, including Instagram, Tumblr, Google, DropBox and GitHub, as well as routers, VPNs, some Android <a href="https://www.cnet.com/news/privacy/how-to-tell-if-your-android-device-is-vulnerable-to-heartbleed/">devices</a>, and perhaps most importantly for Bitcoiners, crypto platforms.



Anyone who ran software containing the Heartbleed bug, or otherwise interacted with sites or services which did, was technically at risk of attack, even if the exploit required them to be active at the time.



So, as admins around the world rushed to patch their systems (95 out of the top 100 sites on Alexa were <a href="https://jhalderm.com/pub/papers/heartbleed-imc14.pdf">patched</a> within 24 hours), the Bitcoin ecosystem ran its own crisis playbook.&nbsp;



Bitstamp <a href="https://siliconangle.com/2014/04/09/bitcoin-weekly-2014-april-9-the-heartbleed-bug-edition/">briefly</a> took itself offline, and Bitfinex suspended withdrawals as Coinbase and BitPay confirmed their stacks were free of the flaw. Cybersecurity researchers and industry figures urged users to change their credentials as soon as possible, while others independently compiled lists of sites and services still running the vulnerable versions of OpenSSL.



Bitcoin Core developers, meanwhile, pushed through an emergency patch within a day.&nbsp;



The consensus software itself did not rely on OpenSSL (network messages are unencrypted by default), but other parts of the client did — particularly relevant for those directly interacting with nodes and the now-depreciated BIP-70 payment requests, which enabled payments by clicking a “bitcoin:” link.&nbsp;



Amazingly, the most <a href="https://jhalderm.com/pub/papers/heartbleed-imc14.pdf">severe</a> known case of a bitcoin-related Heartbleed exploit was the matter of 28 BTC ($6,500 then, $2.5 million now) stolen from 12 customers of early lending platform BTCJam. The platform quickly <a href="https://web.archive.org/web/20140621110906/http://blog.btcjam.com/post/82158642922/official-btcjam-update">refunded</a> the lost coins.



That Heartbleed wasn’t worse for Bitcoin is down to the fast and effective response from the ecosystem as it was in 2014. Bitcoin Core developers would go on to shed the software’s dependencies on OpenSSL over the following years, and by June 2020 it was completely free of it.



We all know bitcoin is backed by Bitcoin. It’s valuable partly due to the energy that miners spend in pursuit of the protocol’s longevity, amplified by external demand for the coins they earn in return.



More critically, however, is that bitcoin is backed by those who’ve contributed to its evolution and safety — and they’ve become exceedingly efficient at it over the past decade and a half, even if they’re only human.



— David Canellis



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<h2 class="wp-block-heading">Rizzo’s take, the Bitcoin Historian</h2>



In an era where Bitcoin upgrades appear <a href="https://www.youtube.com/watch?v=GdgQ3IflBJ0">ever-gridlocked</a>, the Heartbleed bug may seem like a dusty relic of Bitcoin’s reckless past, a callback to a time when the project’s developers moved at the speed of more traditional software projects. (Think: “Move fast and break things.”) In other ways, the Heartbleed bug is a timeless reminder of the risks Bitcoin developers must consider on behalf of users, and how, despite our proclivity to dismiss their recognition as a special class of project contributor, they retain distinctive responsibilities and privileges.&nbsp;



I recall Jameson Lopp’s <a href="https://blog.lopp.net/against-quantum-recovery-of-bitcoin/">excellent new essay</a>, “Against Allowing Quantum Recovery of Bitcoin,” on how Bitcoin might respond to a potential quantum computing threat.



In many ways, the arrival of quantum computers and their deployment on the Bitcoin network would be reminiscent of the Heartbleed bug. Developers would have to act, and those actions will have an effect not just on users, but on the wider network.



Lopp’s work raises more questions than answers, but it’s a solid reminder that while some populist Bitcoin evangelists like Michael Saylor are touting the technology as ready for centuries in Washington DC, there remain scenarios where Bitcoin might need human maintenance, and that may invite new opportunities for human error.



— Rizzo



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